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2016 (7) TMI 158 - ANDHRA PRADESH HIGH COURT

2016 (7) TMI 158 - ANDHRA PRADESH HIGH COURT - 2016 (44) S.T.R. 219 (A. P.) - Waiver of pre-deposit - demand of service tax - undue hardship - Tribunal concluded that the assessee has failed to establish prima facie case and dismissed the said application on the ground that the assessee failed to prove undue hardship and ordered substantial amount of pre-deposit - Section 35-F of the Central Excise Act, 1944 - the main grievance of the assessee is that the assessee is running in loss for the las .....

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an realise the amount from the Sundry Debtors and loans and advances, and make pre-deposit as required under Section 35-F of the Central Excise Act. - Therefore, the reasoning recorded by the Tribunal to decline waiver of predeposit is in accordance with law for the reason that the assessee himself disclosed the claim for depreciation to a tune of ₹ 6.80 crores, Sundry Debtors to the tune of ₹ 8.58 crores and loans and advances of ₹ 11.35 crores. Even otherwise, the assess .....

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n shall stand dismissed - Decided against the petitioner. - C.E.A.NO. 4 OF 2016 - Dated:- 16-6-2016 - SRI RAMESH RANGANATHAN AND SRI M.SATYANARAYANA MURTHY, JJ. FOR THE PETITIONER : SIVA KARTIKEYA ORDER: (Per Hon ble Sri Justice M.Satyanarayana Murthy) The assessee filed this appeal under Section 35G of the Central Excise Act, 1944 challenging the order passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bengalore bearing interim order No.152 of 2015 in Appeal No .....

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m these two, the assessee providing services to certain other customers also for consideration. The services provided by the appellant fall under Section 65 (97a) and the same are liable for service tax under Section 65 (105) (zzza) of the Act from 16.06.2005. For the period 2007 - 2008 to 2010 - 2011, the adjudicating authority, vide its order dated 28.09.2012 bearing original No.91/2012 directed the appellant to deposit a sum of ₹ 11,73,95,057/- towards short payment of the service tax a .....

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ee has already paid ₹ 1.98 crores towards service tax for the period in dispute. The assessee also furnished copies of the income tax returns, profit & loss account statements and balance sheets for the periods ending on 31.03.2009, 31.03.2010 and 31.03.2011 before the tribunal to establish its financial difficulties as the assessee was incurring loss continuously for the period in dispute. The Tribunal while dealing with the said application of the assessee, concluded that the assesse .....

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7; 4.00 crores within 12 months from the date of passing the order. The Tribunal did not consider the income-tax returns and other material produced before it in proper perspective and passed the impugned order by ignoring the material on record. The order is challenged on various grounds mainly contending that the Tribunal did not consider the financial hardship, which is a primary requirement to waive the pre-deposit. Though sufficient material was produced before the Tribunal, the Tribunal er .....

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count statements, balance sheets erroneously passed the impugned order. It is further contended that since the assessee is running in loss for the past few years, it is not in a position to deposit the amount as directed by the Tribunal and it is an arduous task for the assessee to meet such demand and the assessee would face undue hardship in case the pre-deposit is not waived as per the proviso to Section 35-F of the Central Excise Act, 1944 and prayed to allow the appeal by setting aside the .....

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waived, the assessee would be put to undue hardship. The assessee is undoubtedly a partnership firm, whose liability is joint and several and the partners are also liable for payment of the debts due and statutory liabilities to the department including the respondent herein as per Section 25 of the Partnership Act. According to Section 35-F of the Central Excise Act the assessee is under obligation to make pre-deposit of disputed service tax unless it is waived. According to proviso to Section .....

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es to protect the interest of revenue while waiving the pre-deposit and the predeposit may be waived subject to proof of undue hardship that would be suffered by the assessee. In the present facts and circumstances, the Tribunal directed to deposit a sum of ₹ 04.00 crores in compliance of Section 35-F of the Central Excise Act. Therefore, to claim waiver of pre-deposit, it is for the assessee to establish that the assessee would be put to undue hardship, if predeposit is not waived. Sectio .....

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se Act and Section 129-E of the Customs Act, it is the duty of the assessee to establish that if pre-deposit is not waived, the assessee would be put to undue hardship. While granting such waiver of pre-deposit, the authorities concerned must keep in mind, the interest of revenue also (The Commissioner of Central Excise, Guntur Commisionerate, Guntur v. M/s. Sri Chaitanya Educational Committee, Poranki, Vijayawada, represented by its Managing Director (Judgment of A.P. High Court Division Bench .....

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would not justify passing of interim order of waiver of pre-deposit. But if, on a cursory glance, it appears that the demand raised has no legs to stand, it would be undesirable to require the appellant to pay the full or a substantial part of the demand. There can be no rule of universal application in such matters, and the order should be passed keeping in view the factual aspects involved in the case. The Tribunal does not have the license to pass an order which cannot be sustained on the to .....

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convenience and irreparable loss must also be taken in to consideration by the Tribunal or the authorities concerned to safeguard the interest of the revenue and impose certain conditions as my be required as held in Union of India v. Adani Exports Limited (2007) 13 SCC 207 Before adverting to the facts of the case, it is appropriate to advert to the requirement specified in proviso to Section 35-F of the Central Excise Act and Section 129-E of the Customs Act, 1952. The basic requirement to wai .....

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ail, misfortune, tribulation, burden, encumbrance, trial, torment, stress, cross, peril, blow, severity, desolation, harm, damage, casualty, deprivation, grievance, bane, destitution, suffering, pain as per West s Legal Thesaurus/Dictionary. If both the words undue and hardship are read conjointly, it is nothing but more than necessary suffering or exorbitant or difficulty. This Court, while dealing with the similar issue in batch of Appeals C.E.A.No.45 of 2015 and batch (B.Hima Bindu v. Commiss .....

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ortion to the nature of the requirement, and the benefit which the applicant would derive from its compliance. Undue hardship is a matter within the special knowledge of the applicant, and must be established by him. A mere assertion of undue hardship would not suffice. The expression undue hardship is, ordinarily, related to economic hardship. The Tribunal is required to consider the question whether or not a direction to deposit the amount would cause undue hardship. Without considering the sa .....

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al Excise Act. While dealing with such applications for stay, the Tribunal has to exercise its discretion judiciously and keeping in mind the principles laid down in M/s Sri Chaitanya Educational Committee, Poranki, Vijayawada s case, which are as follows. 1. The applications for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand; 2. Three aspects to be focused while dealing with the .....

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ideration of undue hardship, and imposition of conditions to safeguard the interests of revenue have to be kept in view; 6. When the Tribunal decides to grant full or partial stay, it has to impose such conditions as may be necessary to safeguard the interests of the revenue. This is an imperative requirement; and 7. An appellate Tribunal, being a creature of the statute, cannot ignore the statutory guidance while exercising general powers or expressly conferred incidental powers. In the present .....

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-, ₹ 2,39,58,099/- and ₹ 29,94,802/- respectively. Besides that, in Profit and Loss account, the assessee claimed depreciation to an extent of ₹ 6.80 crores. The Profit and Loss account discloses that Sundry Debtors are to the tune ₹ 8.58 crores, and Loan and Advances to the tune of ₹ 11.35 crores. The depreciation claimed to the extent of ₹ 6.80 crores is only for accounting purpose and there will not be any outflow of money for claiming depreciation. That ap .....

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ting procedure of the assessee, even otherwise the loan and advances of the assessee is ₹ 11.35 crores besides Sundry Debtors to a tune of ₹ 08.58 crores. The assessee can realise the amount from the Sundry Debtors and loans and advances, and make pre-deposit as required under Section 35-F of the Central Excise Act. Therefore, the reasoning recorded by the Tribunal to decline waiver of predeposit is in accordance with law for the reason that the assessee himself disclosed the claim f .....

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he requirement under Section 35-F of the Central Excise Act is not based on any material. On an overall consideration of the material on record, the assessee possessed sufficient means to comply with the requirement of Section 35-F of the Central Excise Act and that the assessee would not be put to financial hardship for compliance of the same. By applying the principles laid down in M/s Sri Chaitanya Educational Committee, Poranki, Vijayawada s case, it is for the Tribunal or any authority to c .....

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2007-2008 to 2010-2011. According to Section 11-A of the pre-amended Central Excise Act, the limitation to issue show cause notice is within one year from the date of short levy or short payment or erroneous refund or when erroneous refund is made, but, a proviso annexed to it permits the department to issue show cause notice within five years from the date of such short levy, short payment of erroneous refund due to fraud, collusion or any wilful misstatement or suppression of facts or contrave .....

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de clear that the assessee has suppressed the fact of provision of taxable service in the Service Tax-3 return and also contravened the provisions of Finance Act and Service Tax Rules with an intent to evade payment of service tax. Thus, the case on hand prima facie falls within the ambit of provision to Section 11-A of Central Excise Act and thereby, the contention of the petitioner that it is barred by limitation is not a ground to find out prima facie case in favour of the assessee. However, .....

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e or a case to go for trial. In the present case on hand, the assessee though disputed the demand on the ground of limitation, but unable to satisfy this Court prima facie that the demand is barred by limitation at this stage. However, it is open to the assessee to raise the question of limitation in an appeal. Therefore, in view of reason in earlier paragraphs, we find no prima facie case or a case to go for trial or arguable case in favour of the assessee. Since the assessee failed to establis .....

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